Since January 2025, Installed Building Products has been in a holding pattern, floating around $199.02. The stock also fell short of the S&P 500’s 5.4% gain during that period.
Is there a buying opportunity in Installed Building Products, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is Installed Building Products Not Exciting?
We don't have much confidence in Installed Building Products. Here are three reasons why we avoid IBP and a stock we'd rather own.
1. Core Business Falling Behind as Demand Plateaus
We can better understand Home Builders companies by analyzing their organic revenue. This metric gives visibility into Installed Building Products’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Installed Building Products failed to grow its organic revenue. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests Installed Building Products might have to lean into acquisitions to accelerate growth, which isn’t ideal because M&A can be expensive and risky (integrations often disrupt focus). 
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Installed Building Products’s revenue to drop by 3.6%, a decrease from its 13.4% annualized growth for the past five years. This projection is underwhelming and suggests its products and services will face some demand challenges.
3. Recent EPS Growth Below Our Standards
While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.
Installed Building Products’s EPS grew at an unimpressive 5.5% compounded annual growth rate over the last two years. On the bright side, this performance was higher than its 3.4% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
Installed Building Products isn’t a terrible business, but it doesn’t pass our quality test. With its shares lagging the market recently, the stock trades at 19× forward P/E (or $199.02 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now. We’d suggest looking at an all-weather company that owns household favorite Taco Bell.
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